Question: A circle is inscribed  in a square, then a square is inscribed  in this circle, and finally, a circle is inscribed  in this square. What is the ratio of the area of the smaller circle to the area of the larger square?
Explanation: Let the radius of the smaller circle be $r$. Then the side length of the smaller square is $2r$. The radius of the larger circle is half the length of the diagonal of the smaller square, so it is $\sqrt{2}r$. Hence the larger square has sides of length $2\sqrt{2}r$. The ratio of the area of the smaller circle to the area of the larger square is therefore \[
\frac{\pi r^2}{\left(2\sqrt{2}r\right)^2} =\boxed{\frac{\pi}{8}}.
\]

[asy]
draw(Circle((0,0),10),linewidth(0.7));
draw(Circle((0,0),14.1),linewidth(0.7));
draw((0,14.1)--(14.1,0)--(0,-14.1)--(-14.1,0)--cycle,linewidth(0.7));
draw((-14.1,14.1)--(14.1,14.1)--(14.1,-14.1)--(-14.1,-14.1)--cycle,linewidth(0.7));
draw((0,0)--(-14.1,0),linewidth(0.7));
draw((-7.1,7.1)--(0,0),linewidth(0.7));
label("$\sqrt{2}r$",(-6,0),S);
label("$r$",(-3.5,3.5),NE);
label("$2r$",(-7.1,7.1),W);
label("$2\sqrt{2}r$",(0,14.1),N);
[/asy]